EARNINGS.

Kmart warns on profit, seeks to boost financing

January 11, 2002|By From Tribune news services.

TROY, Mich. — Struggling retailer Kmart Corp. on Thursday warned it won't meet Wall Street's consensus earnings expectation of 1 cent per share for 2001 and said it was in talks with lenders to secure additional financing.

Last week, Prudential Securities analyst Wayne Hood reduced his forecast for Kmart's fourth-quarter earnings and recommended that investors sell the stock. He was not surprised by the earnings warning, though the news about the financing "raised my eyebrows," he said.

"We were already expecting a loss of 12 cents a share for the year. Now, we're wondering if that's low enough," Hood said, but "the surprise is that they are looking for supplemental financing in addition to discussing their existing financing."

He said filing for Chapter 11 bankruptcy protection would make sense. "It doesn't mean they go out of business, but they restructure in the privacy of their own home," Hood said.